Infrastructure spending hurting states

RUNAWAY contributions to infrastructure by the states and territories is responsible for a $106 billion drop in their finances since 2006, a new report has found.

The Grattan Institute says Australia's state and territory governments have spent more on infrastructure, particularly road and rail, over the past five years than at any time since statistics were first measured in the 1980s.

The borrowing for capital expenditure has sent their collective finances backwards from $37 billion in the black in 2006 to $69 billion in the red last year.

"States and territories are spending three per cent more of their budgets on interest and depreciation for past infrastructure," Grattan Institute chief executive officer John Daley said.